Spot gold prices have been in a corrective mode since mid-October and have given up a modest 5.5% from the $1387.65 high. More importantly, however, is that the price structure is probing important July-Oct support in the $1316-$1314 area, which must be contained to avert additional weakness into the area of the rising 50 DMA, now at $1295.

Meanwhile, the cash Dollar Index (DXY), whose down-channel in the comparison chart is inverse to gold's up-channel, remains in a sideways pattern off of its October lows. This is not putting much, if any, pressure on gold prices, although should be an increasing source of concern for gold bulls, including holders of the SPDR Gold Shares (GLD), especially if the DXY (recently at 77.72) rallies and hurdles 78.36.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.